On the 25th January I attended the very first IAB Performance Affiliate conference which took place at the British Museum. There were a range of speakers from various parties covering important topics such as ‘The future of partnerships’, ‘Advertising through audiences’ and ‘The disruption of physical and digital in Retail’.
A session I found particularly interesting was, ‘The Retailers Dilemma’, presented by Claire Davenport, Managing Director, VoucherCodes.co.uk, part of RetailMeNot. This seminar explored the importance of disruptive innovation within the industry and how retailers should prepare for industry change.
I’ve summarised the key takeaways from her session below:
What is disruption?
This is defined as a situation whereby an industry is turned ‘upside-down’ immediately by a change in products and services. An example scenario would be Music Technology.
Since the mid 80’s, the music world was dominated by Vinyl/LPs and almost all the latest singles released in the charts were only released on an album format. This meant, if you wanted to purchase a specific song you needed to buy the whole album in order to listen to the particular song. As a consequence, music industry bosses (EMI) were pocketing large sums of money as customers were paying more then they needed to in order to purchase music. In response to this restriction within the industry, peer-to-peer file sharing agencies such as ‘Napster’ emerged. The rise of Napster disrupted the industry allowing users to download top singles for free and in turn impacting the profits of major record companies such as EMI and Virgin.
Other examples of disruptive innovation are described as follows;
Amazon (Prime Air) – which is an attempt to speed-up delivery services through the use of drones
Uber – which impacted the Taxi industry literally over night by allowing almost anyone in ownership of a car to provide cab services for little money
Spotify – allows users to create playlists on the fly for a small fee
In regards to preparing for disruption, Claire outline the following key points:
1) Analyse movements within marketing trends: regularly check for the emergence of any sudden cults or movements within an industry. This could also relate to innovations outside of the affiliate channel such as ‘Deliveroo’
2) Respond quickly to shifts within the industry: If a movement occurs overnight – do not ignore it! Understand the movement itself and consider fine-tuning your business methodology to accommodate the change.
3) Collaborate internally: One common issue is that organisations tend to forget to share insights or awareness of movements within the industry amongst internal stakeholders – which can result in key movements being overlooked. To circumvent this problem, it is beneficial to have regular discussions with stake-holders to brain storm ideas on how to cope and prepare for change.
To summarise, over the last few years the number of retailers has almost halved due to disruptive innovation. This is an issue which can no longer ignored; disruptive trends usually emerge slowly and then rise rapidly and as such retailers need to ensure they are fully prepared to deal with changes as a result of disruptive innovation.